10/19/22, 8:16 AM [ G.R. No. 192100.

March 12, 2014 ]

729 Phil. 402 ← click for PDF copy

FIRST DIVISION
[ G.R. No. 192100. March 12, 2014 ]
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH)[1],
PETITIONER, VS. ASIA PACIFIC INTEGRATED STEEL
CORPORATION, RESPONDENT.

DECISION

VILLARAMA, JR., J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the July 21, 2009 Decision[2] of the Court of Appeals (CA) in
CA-G.R. CV No. 90539. The CA partially affirmed the September 21, 2007 Decision[3] of the
Regional Trial Court (RTC), Branch 54, of Macabebe, Pampanga, and reduced the annual legal
interest awarded from 12% to 6% per annum.  Also assailed is the appellate court’s April 28,
2010 Resolution[4] denying petitioner’s motion for reconsideration.

As culled from the records, the following are the pertinent facts:

Asia Pacific Integrated Steel Corporation (respondent) is the registered owner of a 17,175-
square meter property situated in Barangay Sta. Monica, Municipality of San Simon, Province
of Pampanga and covered by Transfer Certificate of Title (TCT) No. 271813-R.[5]

On March 1, 2002, the Republic of the Philippines (petitioner) through the Toll Regulatory
Board (TRB) instituted expropriation proceedings against the respondent over a portion of their
property.  The affected area, consisting of 2,024 square meters, shall be traversed by the
expansion of the San Simon Interchange, an integral component of the construction,
rehabilitation and expansion of the North Luzon Expressway (NLEX Project).  Subsequently,
petitioner filed an urgent ex-parte motion for issuance of writ of possession, stating that it
deposited with the Land Bank of the Philippines (LBP) the amount of P607,200.00 (100% of the
value of the property based on current zonal valuation of the Bureau of Internal Revenue [BIR])
in accordance with Section 4(a) of Republic Act No. 8974[6] (R.A. 8794), and  hence the court
has the ministerial duty to place petitioner in possession pursuant to Section 2, Rule 67 of the
Rules of Civil Procedure.[7]

On March 19, 2002, the trial court issued an order  granting petitioner’s motion and directing
the Register of Deeds of Pampanga to cause the annotation of the writ of possession on TCT

https://elibrary.judiciary.gov.ph/search 1/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

No. 271813-R.[8]

In its Answer with Opposition to the Motion for Issuance of Writ of Possession,[9] respondent
questioned the TRB’s authority to expropriate the subject property and objected to petitioner’s
offered compensation which respondent deems unjust because the basis thereof - the BIR zonal
valuation - was an unofficial valuation, being merely based on an internal memorandum issued
by BIR Revenue District No. 21, not by the Asset Valuation Department of the BIR National
Office.  Respondent asserted that just compensation should be at P3,036,000.00 or at P1,500.00
per square meter plus consequential damages, considering the fair market value and the
industrial classification of the subject property.

During the pre-trial conference, the parties agreed on TRB’s authority to expropriate the subject
property but disagreed as to the amount of just compensation.  Petitioner offered to pay
P607,200.00 for the portion taken but respondent made a counter-offer of P1,821,600.00. The
parties eventually agreed to submit the issue of just compensation to three Commissioners
composed of the Municipal Assessor of San Simon as Chairman, and the RTC Branch Clerk of
Court and the Register of Deeds for the Province of Pampanga as Members.[10]

On June 1, 2004, the trial court granted respondent’s motion to withdraw the P607,200.00
deposited by petitioner with the LBP as partial payment for just compensation.[11]

On June 9, 2004, the Commissioners submitted their Report with the following findings and
recommendation:

The affected lot is within the area wherein the land use are residential, commercial,
and industrial (mixed land use), as per Vicinity Map hereto attached as Annex “B”. 
The area is along MacArthur Highway, Quezon Road, Municipal and Barangay
Roads[.]

In the absence of bonafide sales transaction in the area, the Assessor’s Office being
aware of the actual conditions of subject property decided to use opinion values in
the determination of the current and fair market value for the purpose of payment of
just compensation.

OPINION VALUES

A.  Real Estate Brokers/Independent Appraisers/Owners, etc.

1. Residential  -  ranging from P2,000.00 to P2,500.00 per square meter

2. Commercial  - ranging from P2,500.00 to P3,000.00 per square meter

3. Industrial  -  ranging from P1,000.00 above per square meter

B.  Banks and Financial Institutions

1. Residential  -  ranging from P1,000.00 to P2,000.00 per square meter

2. Commercial  -  ranging from P2,000.00 to P3,000.00 per square meter

https://elibrary.judiciary.gov.ph/search 2/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

3. Residential  -  ranging from P1,000.00 to P1,500.00 per square meter

Appraisal conducted by the Assessor of San Simon, Pampanga for various properties
within the area, recommended an amount ranging from P1,000.00 to P1,500.00,
Philippine currency, per square meter, depending on their proximity to the national
roads, municipal roads, and barangay roads, and the improvement/development put
in place.  The amount of P1,000.00 to P1,500.00 was arrived at by the undersigned
commissioners due to the conversion of the subject property from agricultural to
industrial use as evidenced by the Order of Conversion dated July 8, 1991, issued by
Renato B. Padilla, Undersecretary, Department of Agrarian Reform, a xerox copy of
which is hereto attached [as] Annex “C”.[12]

On September 23, 2004, an ocular inspection was conducted in the presence of the parties’
representatives and their respective counsels, during which the trial court noted the following:

1.  There is an existing toll plaza on the right lane of the expressway facing the
direction of Manila with blue colored roofing.

2.  Comprised in the aforesaid toll plaza are three toll booths.  The third booth
located on the extreme right facing Manila occupies a portion of the expropriated
portion of defendant’s property.

3.  The expropriated portion which is shown in a sketch which was marked as
Exhibit H is indicated by its color: green.  It has an area of 2,021 square meters.  The
remaining unexpropriated portion of defendant’s land has an area of 15,151 square
meters.

4.  The unexpropriated portion of the land of defendant is presently very much below
the level of the expressway because the expressway was upgraded.  It is immediately
adjacent to the existing expressway, located as it is, on its right side facing Manila. 
It is swampy with little water.[13]

In its Decision, the trial court ruled as follows:

x x x Although there was no documentary evidence attached to substantiate the

opinions of the banks and the realtors indicated in the Commissioners’ Report, the
Court finds the commissioners’ recommendation of the valuation of industrial lands
at P1,000.00 to P1,500.00 to be fair, absent any showing that the valuation is
exorbitant or otherwise unjustified.  There was no fraud or prejudice that tainted the
report.

The Court finds the valuation of the Republic of the Philippines which was pegged
at Php300.00 per square meter to be very low.  The zonal valuation of the Bureau of
Internal Revenue (Exhibits A and B with submarkings) is merely a gauge or is

https://elibrary.judiciary.gov.ph/search 3/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

necessary in the assessment of correct transfer taxes by the said office.  Furthermore
the Department Order No. 23-98 took effect only last February 2, 1998 which was
four (4) years prior to the filing of the complaint.  The same is true with Ordinance
No. 17, Series of 1994 issued by the Sangguniang Panlalawigan of Pampanga
(Exhibit E) which was issued eight (8) years also prior to the filing of the complaint.

Concerning the Deed of Absolute Sale (Exhibit C) notarized on July 19, 2002, the
same was undated and pertains only to a right of way.  An easement of right of way
transmits no rights except the easement itself.  Hence, the just compensation
pertaining to easement of right of way should be lower than that in the Deed of
Absolute Sale.  x x x

xxxx

Using the recommendation of the three (3) commissioners as guide, the Court finds
the amount of ONE THOUSAND THREE HUNDRED PESOS (Php1,300.00) per
square meter as just compensation for the property subject of expropriation.

WHEREFORE, premises considered, judgment is rendered:

1)  Ordering the plaintiff to pay the defendant in the amount of TWO MILLION
TWENTY FOUR THOUSAND PESOS (Php2,024,000.00) representing the net
amount of just compensation after deducting the partial payment of P607,200.00
based on the valuation of Php1,300.00 per square meter on the expropriated portion
of the parcel of land [Lot 329-A of the subdivision, plan (LRC) Psd-246403, being a
portion of lot 329, San Simon, LRC. Cad Rec. No. 1316] with an area of 2,024
square meters situated in Sta. Monica, San Simon, Pampanga covered by Transfer
Certificate of Title No. 271813-R plus legal interest of 12% per annum from the time
of taking (March 21, 2002) until fully paid less taxes due on the land.

2)  Ordering the plaintiff to pay the costs and/or expenses in relation to the transfer
of ownership of the property in its favor from defendant Asia Pacific Integrated Steel
Corporation.

3)  Condemning the property subject of expropriation free from all liens and
encumbrances for the construction, rehabilitation and expansion of the North Luzon
Expressway.

SO ORDERED.[14]

Petitioner appealed to the CA, arguing that the just compensation should not be more than
P300.00 per square meter and that the correct rate of interest is 6% per annum.

The CA upheld the trial court’s ruling, reiterating the principle that the determination of just
compensation is an inherently judicial function.  It stressed that  any valuation for just
compensation laid down in statutes merely serve as guides or factors and may not substitute the
court’s own judgment as to what amount should be awarded and how to arrive at such amount.
https://elibrary.judiciary.gov.ph/search 4/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

[15]

Further, the CA noted that petitioner itself admitted that the BIR zonal valuation is only for the
purpose of determining the correct amount of transfer taxes.  It held that while BIR zonal
valuation may be a factor in determining just compensation, the same is not a competent basis
thereof.  Citing R.A. 8974, the CA pointed out the distinction between provisional value as a
precondition for the issuance of a writ of possession and the payment of just compensation for
the expropriated property.  While the provisional value is based on the zonal value as may be
determined by the BIR, just compensation is based on the prevailing fair market value of the
property.  Necessarily, the zonal valuation of properties is not equivalent to their fair market
value.[16]

After examining the records, the CA found no reversible error in the trial court’s determination
of just compensation and held that the valuation of P1,500.00 per square meter is more in
consonance with the concept of just compensation based upon due consideration of all
evidence.  Thus:

It is equally settled that the valuation of a property in tax declarations cannot be a

substitute to just compensation.  Elsewise stated, the market value reflected in the
tax declaration of the condemned property is no longer conclusive.  Accordingly, we
cannot appreciate the herein tax declaration in favor of the Republic.

Further, it is uncontested that the deed of sale dated July 19, 2002 between San
Simon Realty, Inc. and the Republic pertained only to a right of way, hence, the
value thereof should be considerably lower.  Ordinance No. 17, as correctly found by
the RTC, was issued on June 22, 1994 or eight (8) years prior to the institution of the
herein complaint.  Certainly, the valuation of properties therein can by no means be
reflective of the current, prevailing and fair value of the subject property.  The
Republic failed to present evidence to controvert he RTC’s finding on the matter. 
Neither has it shown that the property sold thereunder shares the same features as the
herein subject property as to warrant a similar valuation.  We cannot, thus, yield to
the Republic’s submission that its evidence are the proper basis in determining just
compensation for Asia Pacific’s property.[17]

However, the CA modified the rate of interest imposed on the amount due as just compensation
from 12% to 6% in conformity with prevailing jurisprudence.

On April 28, 2010, the CA denied petitioner’s motion for reconsideration, stating that the
argument on valuation by petitioner was merely a rehash of what the CA had already passed
upon.

Hence, this petition assailing the CA’s affirmance of the trial court’s award of just
compensation, the legal basis of which is allegedly insufficient.

Petitioner argues that the evidence for determining the amount of just compensation in
expropriation cases should be on those factors provided in Section 5 of R.A. 8974.  Considering
https://elibrary.judiciary.gov.ph/search 5/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

such factors and the evidence submitted by the parties before the trial court, petitioner maintains
that just compensation for the subject property should be no more than the zonal valuation
(P300.00 per square meter), and in no case should it amount to the market value of P1,300.00
per square meter adjudged by the trial and appellate courts.  Petitioner claims that such huge
sum for only 2,024-square meter portion of respondent’s 17,175-square meter property, is
unbelievably 433.4% more than the 1998 BIR zonal value for an underdeveloped industrial land
at the time of its taking.

On the other hand, respondent contends that no reversible error was committed by the CA in
affirming the trial court’s decision after considering all the arguments raised by petitioner and
the evidence on record. It asserts that the main issue of just compensation and the findings
thereon by the trial court as affirmed by the CA is a question of fact which should not be
disturbed by this Court. Moreover, respondent asserts that the determination by the trial court is
entitled to the highest respect considering that the judge has personal knowledge of the
condition of the subject property, having conducted an ocular inspection on September 23,
2004.

We grant the petition.

As a rule, a petition for review under Rule 45 of the Rules of Court covers only questions of
law. Questions of fact are not reviewable and cannot be passed upon by this Court in the
exercise of its power to review.  The distinction between questions of law and questions of fact
is established.  A question of law exists when the doubt or difference centers on what the law is
on a certain state of facts.  A question of fact, on the other hand, exists if the doubt centers on
the truth or falsity of the alleged facts.[18]  This being so, the findings of fact of the CA are final
and conclusive and this Court will not review them on appeal.[19]

For a question to be one of law, the same must not involve an examination of the probative
value of the evidence presented by the litigants or any of them. The resolution of the issue must
rest solely on what the law provides on the given set of circumstances.[20]  In this case, the only
legal issue raised by petitioner is whether the trial court based its determination of just
compensation on the factors provided under existing laws and jurisprudence.

Section 5 of R.A. 8974 enumerates the standards for assessing the value of expropriated land
taken for national government infrastructure projects, thus:

SECTION 5. Standards for the Assessment of the Value of the Land Subject of
Expropriation Proceedings or Negotiated Sale.  – In order to facilitate the
determination of just compensation, the court may consider, among other well-
established factors, the following relevant standards:

(a)  The classification and use for which the property is suited;

(b)  The developmental costs for improving the land;

(c)  The value declared by the owners;

https://elibrary.judiciary.gov.ph/search 6/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

(d)  The current selling price of similar lands in the vicinity;

(e)  The reasonable disturbance compensation for the removal and/or demolition of
certain improvements on the land and for the value of the improvements thereon;

(f)  The size, shape or location, tax declaration and zonal valuation of the land;

(g)  The price of the land as manifested in the ocular findings, oral as well as
documentary evidence presented; and

(h)  Such facts and events as to enable the affected property owners to have
sufficient funds to acquire similarly-situated lands of approximate areas as those
required from them by the government, and thereby rehabilitate themselves as early
as possible.

In this case, the trial court considered only (a) and (d): (1) the classification of the subject
property which is located in an area with mixed land use (commercial, residential and industrial)
and the property’s conversion from agricultural to industrial land, and (2) the current selling
price of similar lands in the vicinity – the only factors which the commissioners included in
their Report. It also found the commissioners’ recommended valuation of P1,000.00 to
P1,500.00 per square to be fair and just  despite the absence of documentary substantiation as
said prices were based merely on the opinions of bankers and realtors.

In National Power Corporation v. Manubay Agro-Industrial Development Corporation,[21] the

recommended price of the city assessor was rejected by this Court.  The opinions of the banks
and the realtors as reflected in the computation of the market value of the property and in the
Commissioners’ Report, were not substantiated by any documentary evidence.

Similarly, in National Power Corporation v. Diato-Bernal,[22] this Court rejected the valuation
recommended by court-appointed commissioners whose conclusions were devoid of any actual
and reliable basis. The market values of the subject property’s neighboring lots were found to be
mere estimates and unsupported by any corroborative documents, such as sworn declarations of
realtors in the area concerned, tax declarations or zonal valuation from the BIR for the
contiguous residential dwellings and commercial establishments. Thus, we ruled that a
commissioners’ report of land prices which is not based on any documentary evidence is
manifestly hearsay and should be disregarded by the court.

We find that the trial court did not judiciously determine the fair market value of the subject
property as it failed to consider other relevant factors such as the zonal valuation, tax
declarations and current selling price supported by documentary evidence.  Indeed, just
compensation must not be arrived at arbitrarily, but determined after an evaluation of different
factors.[23]

Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator.  The measure is not the taker’s gain, but the owner’s loss.  The word “just”
is used to intensify the meaning of the word “compensation” and to convey thereby the idea that
the equivalent to be rendered for the property to be taken shall be real, substantial, full, and
https://elibrary.judiciary.gov.ph/search 7/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

ample.  Such “just”-ness of the compensation can only be attained by using reliable and actual
data as bases in fixing the value of the condemned property.[24] Trial courts are required to be
more circumspect in its evaluation of just compensation due the property owner, considering
that eminent domain cases involve the expenditure of public funds.[25]

We agree with the trial court that it was not bound by the assessment report of the
commissioners and that it had the discretion to reject the same and substitute its own judgment
on its value as gathered from the record, or it may accept the report/recommendation of the
commissioners in toto and base its judgment thereon.  However, the decision of the court must
be based on all established rules, upon correct legal principles and competent evidence.[26]  The
court is proscribed from basing its judgment on speculations and surmises.

Nonetheless, we cannot subscribe to petitioner’s argument that just compensation for the subject
property should not exceed the zonal valuation (P300.00 per square meter).

In Republic v. Court of Appeals,[27] we held that --

The constitutional limitation of “just compensation” is considered to be the sum

equivalent to the market value of the property, broadly described to be the price
fixed by the seller in open market in the usual and ordinary course of legal action
and competition or the fair value of the property as between one who receives, and
one who desires to sell, it fixed at the time of the actual taking by the government. x
xx

Zonal valuation is just one of the indices of the fair market value of real estate.  By itself, this
index cannot be the sole basis of “just compensation” in expropriation cases.[28]  As this Court
ruled in Leca Realty Corporation v. Rep. of the Phils.[29]:

The Republic is incorrect, however, in alleging that the values were exorbitant,
merely because they exceeded the maximum zonal value of real properties in the
same location where the subject properties were located.  The zonal value may be
one, but not necessarily the sole, index of the value of a realty. National Power
Corporation v. Manubay Agro-Industrial held thus:

“x x x [Market value] is not limited to the assessed value of the property

or to the schedule of market values determined by the provincial or city
appraisal committee. However, these values may serve as factors to be
considered in the judicial valuation of the property.”

The above ruling finds support in EPZA v. Dulay in this wise:

“Various factors can come into play in the valuation of specific properties
singled out for expropriation. The values given by provincial assessors
are usually uniform for very wide areas covering several barrios or even

https://elibrary.judiciary.gov.ph/search 8/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

an entire town with the exception of the poblacion. Individual differences

are never taken into account. The value of land is based on such
generalities as its possible cultivation for rice, corn, coconuts or other
crops.  Very often land described as ‘cogonal’ has been cultivated for
generations. Buildings are described in terms of only two or three classes
of building materials and estimates of areas are more often inaccurate
than correct. Tax values can serve as guides but cannot be absolute
substitutes for just compensation.” (Emphasis supplied.)

Among the factors to be considered in arriving at the fair market value of the property are the
cost of acquisition, the current value of like properties, its actual or potential uses, and in the
particular case of lands, their size, shape, location, and the tax declarations thereon.  The
measure is not the taker’s gain but the owner’s loss.[30]  To be just, the compensation must be
fair not only to the owner but also to the taker.[31]

It is settled that the final conclusions on the proper amount of just compensation can only be
made after due ascertainment of the requirements set forth under R.A. 8974 and not merely
based on the declarations of the parties.[32]  Since these requirements were not satisfactorily
complied with, and in the absence of reliable and actual data as bases in fixing the value of the
condemned property, remand of this case to the trial court is in order.

WHEREFORE, the petition for review on certiorari is GRANTED.  The Decision dated July
21, 2009 and Resolution dated April 28, 2010 of the Court of Appeals in CA-G.R. CV No.
90539 are hereby SET ASIDE.

This case is remanded to the trial court for the proper determination of just compensation, in
conformity with this Decision.

SO ORDERED.

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Reyes, JJ., concur.

[1]The complaint and the appeal in the instant case were filed for and on behalf of the Republic
of the Philippines by the Toll Regulatory Board (TRB).  However, by virtue of Executive Order
No. 686, Series of 2007, entitled, Transferring Back the Toll Regulatory Board from the
Department of Public Works and Highways to the Department of Transportation and
Communications and Clarifying Its Mandate, the power to condemn private property for
highways, roads, bridges and public thoroughfares was relegated from the TRB to the DPWH. 
(Rollo, p. 12.)

[2] Rollo,
pp. 41-59.  Penned by Associate Justice Hakim S. Abdulwahid with Associate Justices
Sesinando E. Villon and Myrna Dimaranan Vidal concurring.

[3] Records, pp. 420-430.  Penned by Presiding Judge Lucina Alpez-Dayaon.

https://elibrary.judiciary.gov.ph/search 9/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

[4] Rollo,
pp. 61-63.  Penned by Associate Justice Hakim S. Abdulwahid with Associate Justices
Sesinando E. Villon and Romeo F. Barza concurring.

[5] Id. at 42; records, p. 9.

[6]“An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National
Government Infrastructure Projects and For other Purposes.”

[7] Rollo, pp. 42-43.

[8] Id. at 170.

[9] Id. at 156-158.

[10] Records, pp. 102, 109, 111 and 229.

[11] Id. at 186-187.

[12] Id. at 188-189.

[13] Id. at 241.

[14] Id. at 429-430.

[15] Rollo, p. 54.

[16] Id. at 55.

[17] Id. at 55-56.

[18] Westmont
Investment Corporation v. Francia. Jr., G.R. No. 194128, December 7, 2011, 661
SCRA 787, 797, citing Microsoft Corporation v. Maxicorp, Inc., 481 Phil. 550, 561 (2004).

[19] Id.

[20] Leoncio, et al. v. de Vera, et al., 569 Phil. 512, 516 (2008).

[21] G.R. No. 150936, August 18, 2004, 437 SCRA 60, 70.

[22] G.R. No. 180979, December 15, 2010, 638 SCRA 660, 668-669.

[23] See Leca Realty Corporation v. Rep. of the Phils., 534 Phil. 693, 707 (2006).
https://elibrary.judiciary.gov.ph/search 10/11
10/19/22, 8:16 AM [ G.R. No. 192100. March 12, 2014 ]

[24]National Power Corporation v. Diato-Bernal, supra note 22 at 669, citing Republic v.

Libunao, G.R. No. 166553, July 30, 2009, 594 SCRA 363, 376.

[25] Id.

[26] See Manansan v. Republic of the Philippines, 530 Phil. 104, 117-118 (2006).

[27] G.R. No. 146587, July 2, 2002, 383 SCRA 611, 622-623.

[28] Republic v. Tan Song Bok, G.R. No. 191448, November 16, 2011, 660 SCRA 330, 348,
citing Leca Realty Corporation v. Rep. of the Phils., supra note 23, at 708-709.

[29] Id.

[30] Republic
v. Court of Appeals, G.R. No. 160379, August 14, 2009, 596 SCRA 57, 70, citing
B.H. Berkenkotter & Co. v. Court of Appeals, G.R. No. 89980, December 14, 1992, 216 SCRA
584, 586 & 587.

[31] Id.

[32] Bases Conversion Development Authority v. Reyes, G.R. No. 194247, June 19, 2013, p. 8,
citing Republic v. Judge Gingoyon, 514 Phil. 657, 698 (2005).

Source: Supreme Court E-Library | Date created: May 24, 2017

This page was dynamically generated by the E-Library Content Management System

https://elibrary.judiciary.gov.ph/search 11/11